Fancy yourself an intrepid entrepreneur? SAA is looking for a partner to help turn its bad luck around - bad luck in the billions.

In a sudden change of plans, South African Airways (SAA), the country’s official national carrier, is on the search for an equity partner to help ease its funding crisis. In response, union Solidarity abandons its bid to put the embattled airline into business rescue.

SAA CEO, Vuyo Jarana, confirmed in a letter to Solidarity its intentions in seeking a strategic equity partner. Previously SAA skirted the issue of privatisation, relying solely on government bailouts to keep it airborne.

Speaking to Business Tech, Jarana explained that government announced its willingness for the private sector to participate in SAA’s owner administration, saying:

“The shareholder (government), the SAA board, and management agreed to, in view of the pressure to fund SAA, immediately proceed with the process.”

South African Airways: A sinking ship?

In 2017 the national air carrier of South Africa received R10 billion from the government in bailouts. It’s been reported that SAA could barely cover its expenses without government funding.

Cumulative total government bailouts for the airline, since 1999, amount to almost R35 billion. The airline has stated that in order to keep the airline operational it will need a further R21 billion by 2021, by which time it should ‘break even.’

If the airline cannot secure a private equity partner within the next year, it would have cost tax-paying South Africans over R50 billion in operational costs.

Mnyamezeli Booi, an ANC MP, said it appeared the airline has no capital to run itself, with negative equity currently sitting at R9.2 billion.

SAA privatisation a last-ditch rescue effort

The hunt for a strategic equity partner has begun as a last-ditch effort to avert the complete financial collapse of the airline.

The real question is; what company is brave enough to throw time and money into a business which has been run as a government charity scheme for more than 10 years?

If indeed SAA and the government come to an arrangement, whereby an applicable equity partner is endorsed, who will have complete administrative control over the flailing airline’s business acumen?

It seems clear that should a private entity be willing to throw the dice on the national air carrier, they would need to restructure and rebuild the entire organisational backbone of the airline with the sole aim of optimizing profits and purging incompetency.